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2017

AVENTUS RETAIL PROPERTY FUND

HALF YEAR

INVESTOR PRESENTATION

15 FEBRUARY 2017

Contents

03 Strategy

04 Key Achievements

06 Portfolio Highlights

13 Financial Results

18 Acquisitions

20 Development

25 Outlook

28 Appendix 1 – Portfolio Overview

31 Appendix 2 – Industry Dynamics

Belrose Super Centre, NSWJindalee Home, QLD

Speakers

Darren Holland, CEO

Lawrence Wong, CFO

3Aventus Retail Property Fund | Half Year Results | 31 December 2016

Delivering on Strategy

The Fund is implementing its 4 key growth initiatives to drive long termvalue creation and sustainable earnings growth

Portfolio Management

Development Pipeline

Consolidation Opportunities

Potential Benefits from Zoning and Planning Reforms

Init

iati

ve

Optimise and broaden the

tenancy mix through

proactive leasing, leveraging

retailer relationships and

delivering operational

excellence

Identify and deliver value

enhancing development

opportunities within the

existing portfolio

Selective acquisitions to

enhance the Fund’s portfolio

and entrench the Fund as the

largest pure-play large format

retail (“LFR”) landlord in

Australia

Take advantage of regulatory

reforms in zoning and planning

regimes for the existing portfolio

Ou

tco

me

The portfolio continues to

perform well with high

occupancy, positive leasing

spreads and low incentives

from a diverse mix of

national retailers

Completed the expansion of

Belrose Super Centre,

commenced repositioning of

the former Bunnings

tenancy at Sunshine Coast

Home and gained 4

approvals to expand the

development pipeline

Acquired adjacent 55,840 sqm

development site at Tuggerah

Super Centre further

consolidating control of the retail

precinct; maintained disciplined

approach to potential

acquisitions

Actively participate and track

changes to state zoning reforms

through the Large Format Retail

Association (“LFRA”); introduced

new retailers and service providers

into the portfolio and commenced

master planning of 2 centres with

flexible zoning


Key Achievements

SINGLE SECTOR FOCUS AND SUSTAINABLE INCOME GROWTH

Fund Highlights Financial Management Portfolio Performance

$34.6mFunds From Operations (FFO)1

35.0% gearingwithin target range of 30% - 40%

98.0% occupancy30 bps from 97.7%4,7

8.8 centsFFO per unit1,2

on track with guidance3

$2.10 NTA per unit

4% from $2.02 per unit4

5% FY17 lease expiriesfrom 12%4,7

7.8 centsDPU on 90% payout ratio

11.2%index outperformance5

$25.1mnet valuation 6

1. For the 6 months ended 31 Dec 2016

2. Based on a weighted average number of units of 395.0m

3. Full year FY17 earnings guidance is FFO per unit of 17.5 – 18.0 cents as at 30 Jun 2016

4. As at 30 Jun 2016

5. Total unitholder return for the 6 months ended 31 Dec 2016 outperformance to S&P / ASX 200 A-REIT accumulation index on an annualised basis; Source: Bloomberg

6. Movement includes adjustments relating to straight-lining of rental income and amortisation of rental guarantees

7. By GLA

⇧

⇧

⇧⇩

1. PORTFOLIO HIGHLIGHTS

Sunshine Coast Home, QLD


Portfolio Highlights

85% OF ALL LEASES

have annual fixed or CPI increasesfrom 80%1,4

FOCUSED ON OPERATIONAL EXCELLENCE AND INCOME OPPORTUNITIES

PORTFOLIO VALUE OF $1.3bn

3%1

67 LEASES NEGOTIATED OVER GLA of 55,000 SQM2

with low incentives and positive leasing spreads

84% NATIONAL RETAILERS3

from 33%1,3

4.3 year WALEfrom 4.1 years1,4

34% NON-HOUSEHOLD USES

from 1.1m sqm1

Increased land holding to c. 1.2m sqm

7.40% PORTFOLIO CAP RATE

from 7.53%1

1. As at 30 Jun 2016

2. For the half year ended 31 Dec 2016

3. By GLA

4. By gross rent

⇧⇧ ⇧

⇧ ⇧

⇩


• National retailers remained steady at 84% of the total portfolio by GLA and the majority of retailers are publicly listed

Diversified National and Publicly Listed Retailers

RANK RETAIL GROUPPUBLIC

COMPANYSTORES1 BRANDS

% OF INCOME1

1 Steinhoff Asia Pacific 29 (⇧)2Freedom, Snooze, Best & Less, Harris Scarfe, Fantastic

Furniture, Plush and Original Mattress Factory11% (⇧)2

2 Wesfarmers 12 (⇩). Bunnings, Officeworks, Coles and 1st Choice Liquor 8% (⇩).

3 JB Hi-Fi 16 (⇧)2 JB Hi-Fi and The Good Guys 6% (⇧)2

4 Super Retail Group 20 (⇩). Supercheap Auto, BCF, Amart Sports and Rebel 5% (⇩).

5 Harvey Norman 5 (-). Harvey Norman and Domayne 5% (-).

6 Spotlight Group 9 (-). Spotlight and Anaconda 4% (-).

7 Woolworths 4 (-). Masters, Dan Murphy’s, BWS and Woolworths Caltex 3% (-).

8 Beacon Lighting 12 (-). Beacon Lighting 2% (-).

9 Nick Scali 5 (-). Nick Scali and Sofas 2 Go 2% (-).

10 Adairs Retail Group 11 (-). Adairs and Adairs Kids 2% (-).

TOTAL 123 . 48% .

1. Change represents movement since 30 Jun 2016

2. Increase due to Steinhoff acquisition of Fantastic Holdings and JB Hi-Fi acquisition of The Good Guys


34%

30%

13%

11%

7%

2% 2%

26%

30%

20%

8%

10%

2%

5%

Non-HouseholdGoods

& Services

Furniture Hardware& Garden

Homewares Electrical Coverings Vacant

AVN Industry

comprised of

Expanding the Non-Household Category• The largest tenant category, non-household goods and services retailers, improve centre performance by driving greater

weekday traffic, increasing visit frequency and lengthening customer visits and linger time

31 27

101516

1949

10

Tenants in the non-household category include:Tenancy Mix: AVN vs. Industry (by GLA)1,2

1. As at 31 Dec 2016, non-household goods includes pet supplies, baby supplies, sporting, camping and leisure, cafes, restaurants, supermarkets, liquor, fitness centres, medical centres, offices, chemists and automotive

2. Source: Deep End Services (centres larger than 10,000 sqm) as at 30 Jun 2016

Baby Supplies andChildren’s Play Centres

Pet ShowroomsSupermarkets, Liquor and

Convenience Stores

Offices and Government

Service Providers

Cafés & Restaurants

Leisure & Sports Stores

Fitness & Medical

Automotive Stores


Consistently High Occupancy

PORTFOLIO VACANCY HAS BEEN CONSISTENTLY LOWER THAN THE INDUSTRY AVERAGE1

3.8%

1.2%

1.6%

3.1%

2.0%

2.6%2.9%

2.3%2.0%

8.1%

5.8%

6.1%

7.2%

6.5%

5.8% 5.6%

5.0%

Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Dec-16

AVN Portfolio National Average

Number of LFR centres comprising the AVN Portfolio

4 6 7 9 11 12 14 20 20

1. Source: Deep End Services (centres larger than 10,000 sqm); By GLA

2. Historical metrics exclude centres prior to acquisition by the Fund

High occupancy

Low incentives

Positive leasing spreads

2


57%28%

15%

Fixed (Predominantly 3% - 5%) CPI Market/Expiry

2%

13%

11%

15%

12%

10%

5%

10%

3%

15%

Vacant FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 Beyond

Staggered Lease Expiry Profileand Structured Rent Increases

SIGNIFICANT PROGRESS ON FY17 EXPIRIES1 85% OF LEASES HAVE ANNUAL FIXED OR CPI INCREASES2

1. Holdover tenancies as at 31 Dec 2016 treated as FY17 expiries

2. By gross rent

17%

JUN 15: 18%

14%

DEC 15:

MAR 16:

5%

• Proactive leasing has resulted in 67 leases being negotiated in 1H17 resulting in FY17 expiries being reduced from 12% to 5%

• Increased the number of leases with fixed increases as opposed to CPI reviews

12%JUN 16:

DEC 16:(reduced

from 30%)

(up from 50%)

(reduced from 20%)


Centre Valuation Uplift• Portfolio value increased by $41.0 million, on a gross basis, and $25.1

million on a net basis excluding acquisitions, capitalised expenditure and non-cash accounting adjustments over the 6 months to 31 Dec 2016

• Independent valuations as at 31 Dec 2016 were obtained for Cranbourne Home, Highlands Hub, Mile End Home, Peninsula Home, Tweed Hub and Warners Bay Home with these centres increasing in value by $19.6 million (+5.3%, on a net basis) and the capitalisation rate tightening from 7.79% to 7.46%

• Consequently, the WACR of the portfolio tightened to 7.40% from 7.53% at 30 Jun 2016. The valuations take into account annual rent increases, market rent reviews, completion of a number of asset management and development initiatives together with reductions in capitalisation rates

1. Capitalised expenditure represents development and maintenance capex, capitalised leasing costs and capitalised interest on developments

2. Non-cash adjustments represent rental straight-lining adjustments and amortisation of rental guarantees

Masters Update

• During the period, Woolworths announced the closure of all of its former Masters tenancies. The AVN portfolio includes one tenancy at Cranbourne. Rent under the lease which has 13.8 years left of its term continues to be paid, and Woolworths remains as guarantor. The Fund is assessing long-term solutions for this tenancy

• With respect to the other former Masters tenancies, there is minimal overlap with only 4 centres in AVN’s portfolio located within a 5 km radius of vacant former Masters tenancies. These centres at Bankstown, Mile End, Ballarat and Peninsula are well established, substantially larger in size, 100% leased and represent superior locations to the proximate former Masters tenancies

$M

Portfolio valuation – 30 Jun 2016 1,273.3

Additions 4.0

Capitalised expenditure1 10.5

Non-cash adjustments2 1.4

Net fair value adjustments 25.1

Gross portfolio increase 41.0

Portfolio valuation – 31 Dec 1,314.3

2. FINANCIAL RESULTS

Logan Super Centre, QLD


Financial Performance

Comments

• Financial performance for HY17

includes full half year

contribution for the assets

acquired in FY16 including the

Blackstone portfolio

• Financial performance for HY16

represents the results of Kotara

Home South for the period 1

Jul 2015 to 31 Dec 2015 plus

the post IPO results of the

Group for the period 20 Oct

2015 to 31 Dec 2015

• HY17 finance costs include

mark-to-market gains on

interest rate swaps of $3.6m

6 MONTHS TO31 DEC 2016

$M

6 MONTHS TO 31 DEC 2015

$M

Rental and other property income 64.5 22.1

Net movement in fair value of investment properties 25.1 23.2

Other income 0.4 0.1

Property expenses (17.0) (5.6)

Finance costs (3.8) (3.4)

Management fees (3.9) (1.1)

Portfolio acquisition and transaction costs - (56.9)

Other expenses (1.0) (0.5)

Profit/(loss) for the period 64.3 (22.1)


Funds From Operations (FFO)

1. Based on a weighted average number of units of 395.0m

6 MONTHS TO31 DEC 2016

$M

Profit for the period 64.3

Straight-lining of rental income (2.1)

Amortisation of rental guarantees 0.7

Amortisation of debt establishment costs 0.4

Net movement in fair value of investment properties (25.1)

Net movement in fair value of derivative financial instruments (3.6)

FFO 34.6

Maintenance capex (2.0)

Leasing costs (1.6)

Adjusted FFO (AFFO) 31.0

FFO per unit (cents)1 8.8

Distribution per unit (cents) 7.8

Payout ratio (% of FFO) 90%


Comments

• The increase in investment

properties compared to Jun

2016 includes $25.1m in fair

value gain adjustments, capital

expenditures of $8.4m and

$4.0m relating to the

acquisition of additional land

at Tuggerah

• Other assets at Jun 2016

included $4.3m in prepaid

acquisition, GST and

transaction costs relating to

the acquisition of the Tuggerah

land

• The decrease in other liabilities

is mainly attributable to a

$2.5m decrease in interest rate

swap liabilities during the

period

1. Investment properties includes rental guarantees of $3.0m at 31 Dec 20162. The gearing ratio is calculated as total bank debt less cash and cash equivalents divided by total assets less cash and cash equivalents

Balance Sheet

31 DEC 2016 $M

30 JUN 2016$M

MOVEMENT$M

Assets

Cash and cash equivalents 2.9 4.3 (1.4)

Investment properties1 1,314.3 1,273.3 41.0

Other assets 5.1 8.5 (3.4)

Liabilities

Borrowings (462.7) (459.1) 3.6

Other liabilities (27.2) (30.6) (3.4)

Net assets 832.4 796.4 36.0

Units on issue (million) 396.0 394.7 1.3

NTA per unit ($) $2.10 $2.02 $0.08

Gearing (%)2 35.0% 35.7% (0.7%)


DEBT AND HEDGING PROFILE AT 31 DEC 2016

• The gearing ratio of 35.0% is within the target range of 30% to 40%

• Fixed rates on interest rate swaps range from 1.83% to 2.36%

1. The gearing ratio is calculated as total bank debt less cash and cash equivalents divided by total assets less cash and cash equivalents2. WACD is calculated based on historical finance costs excluding debt establishment costs for the 6 months ended 31 Dec 20163. The LVR ratio is calculated as total bank debt divided by the total fair value of investment properties. Fair value is calculated by reference to the most recent independent valuation for each property4. ICR is calculated for the 12 months ended 31 Dec 2016

Capital Management

KEY METRICSDEC 2016

$M

Drawn debt ($M) 465.3

Facility limit ($M) 500.0

Cash and undrawn debt capacity ($M) 37.6

Gearing1 35.0%

LVR (max. 55%)3 36.1%

ICR (min. 2.0x)4 6.0x

Weighted average cost of debt2 3.1%

Weighted average debt maturity (years) 3.0

Weighted average hedged debt maturity (years) 3.1

Proportion of drawn debt hedged 51.6%

BANK DEBTDRAWN

$MUNDRAWN

$M MATURITY

Tranche A 200.0 - Oct 2020

Tranche B 200.0 - Oct 2018

Tranche C 65.3 34.7 May 2021

Total 465.3 34.7

INTEREST RATE SWAP MATURITY

NOTIONAL AMOUNT$M

FY19 80.0

FY20 60.0

FY21 100.0

Total 240.0

3. ACQUISITIONS

Kotara Home South, NSW


HarveyNorman

15%

AVN12%

Smaller portfolios

(2+ centres)35%

Single centre ownership

38%

0% 20% 40% 60% 80% 100%

1H17 Acquisitions

• In the first half of FY17, the Fund settled on a 55,840 sqmdevelopment site opposite the recently repositioned Tuggerah Super Centre for $3.8 million1 to expand control of the precinct and provide for future development and expansion opportunities. The site is strategically located 350 metres from the Tuggerah train station

• Transaction volume across the sector during the 6 months to 31 Dec 2016 was less than one third of the $453m volume during the same period in 2015 and 31% of the first half of 2016

• AVN is the largest pure-play large format retail owner in Australia and remains well positioned to consolidate the highly fragmented sector

Australian LFR centre ownership2

(9% at IPO)

1. Excludes GST and acquisition costs

2. Source: Deep End Services, centres larger than 10,000 sqm; By GLA, as at 30 Jun 2016

Tuggerah Super Centre, NSW

4. DEVELOPMENT

Tuggerah Super Centre, NSW


Development Update

Overview• The development pipeline is a key driver of the Fund’s portfolio enhancement

strategy with a focus on year one cash returns

• The estimated residual development pipeline to 30 June 2017 of $15 million is on track

Project Completions• Peninsula Home in Victoria is now 100% occupied following the opening of

Aldi, a discount chemist and café. The centre has seen an average traffic increase of 20% year-on-year since the project was completed in FY16

• Tuggerah Super Centre in New South Wales is now 100% occupied and has seen an average traffic increase of 30% year-on-year since the revitalisation project was completed in FY16

• The expansion of the Belrose Super Centre in New South Wales to add 2,263 sqm of retail GLA to the existing rooftop car park is complete and will open for trade in March 2017

Active Projects• Re-development of the former Bunnings tenancy at Sunshine Coast Home in

Queensland is due to commence this quarter. National retailers Super Amartand Sheridan have pre-committed to 6,500 sqm or 84% of the space

• Construction of the first child care child facility in the portfolio is due to commence at Cranbourne Home in Victoria this quarter with completion anticipated in early FY18

Cranbourne Home, VIC1

Sunshine Coast Home, QLD1

1. Artist’s impression


Development Pipeline

• The portfolio covers 1.2 million sqm of land nationally with a low average site coverage of 41%

• Development or value enhancing opportunities have been identified at 3 out of the 5 centres acquired in May 2016

• During the period, approvals were obtained for 4 developments which will contribute to the medium term development pipeline

• In addition, the Fund has commenced long term master planning on 2 centres that benefit from flexible zoning

1. Project values represent remaining project cost

2. Works continue past current forecast period

FY17

Remaining Cost1 1QJul-Sep

2QOct-Dec

3QJan-Mar

4QApr-Jun

Belrose Super Centre, NSW | $3m

Cranbourne Home Stage 8, VIC | $3m2

Sunshine Coast Home, QLD | $8m2

Refurbishments and .Under Investigation | $1m2

Underway Committed Belrose Super Centre, NSW


Case Study – Belrose

Leasing

• The Fund successfully completed a major leasing program in 2016 resulting in the negotiation of new leases and lease extensions for 16 retailers representing 47% (17,100 sqm) of the centre’s GLA with positive leasing spreads and low incentives

• The centre’s WALE has increased from 2.7 years as at Dec 15 to 4.5 years as at Dec 16, with major retailers Domayne/Harvey Norman and Freedom signing longer lease extensions

• New categories introduced to the centre include baby products, toys and barbeques

Development

• Delivered a $6m expansion on time and budget adding 2,263 sqm of additional GLA pre-committed to national retailers Barbeques Galore and Focus on Furniture

• Total centre approach has delivered material valuation gains to date resulting in a net valuation increase to $132.9m from $117.6m1

(+13.0%) as at 31 Dec 2015

Acquisition

• Acquired adjacent Belrose Gateway Centre in FY16 for $6.4m at an 8.14% cap rate in an off-market transaction to further control the retail precinct

Asset Management

• Management negotiated cost savings and synergies across a number of operations in the centre resulting in a reduction of retailer operating expenses by $0.2m per annum, boosting net property income

Before

1. Includes acquisition cost and redevelopment spend

Now

Dev.


NEW ARRIVAL: DEVELOPMENT SITE

BARBEQUES GALORE

10 Year Lease

Case Study – Belrose (cont.)

NEW TENANT:

BABY BUNTING

10 Year Lease

NEW TENANT:

DISCOUNT TOY CO

5 Year Lease

RENEWAL: GODFREYS

5 Years

NEW TENANT: FLAVOUR MILL

8 Year Lease

RENEWAL: STORE HOUSE

5 Years

RENEWAL: FREEDOM

10 Years

RENEWAL:

KITCHEN WORKS

3 Years

RENEWAL: DOMAYNE

7 Years

NEW TENANT: BOORI

5 Year Lease

RENEWAL:

RICKS WOK N NOODLE

5 Years

NEW TENANT: SNOOZE

7 Year Lease

RENEWAL: DECORUG

5 Years

RENEWAL: OZ DESIGN

5 Years

NEW TENANT: SHERIDAN

5 Year Lease

CALENDAR YEAR 2016

16 deals completed

Totalling 17,100 sqm

47% of GLA secured

New retailers

Renewals & Expansions

New Development

Legend

NEW ARRIVAL:DEVELOPMENT SITE

FOCUS ON FURNITURE

7 Year Lease

5. OUTLOOK

Peninsula Home, VIC


Outlook

• Growth in the net income of the portfolio underpinned by diversification in the tenancy mix, high occupancy rates, low incentives, positive leasing spreads and annual rent increases

• Progress value-adding development opportunities and continue to build the medium to long term development pipeline

• Investigate selective acquisitions to supplement organic portfolio income growth

• Maintain a disciplined and flexible capital structure by diversifying funding sources and lengthening debt expiries

• The Fund confirms its FY17 earnings guidance of1:

• FFO per unit of 17.5 – 18.0 cents

• Distribution per unit of 15.8 – 16.2 cents based on a payout ratio of 90% of FFO

1. Assuming no material change to the operating environment


Questions?

Integrated and scalable platform

Deep retail expertise and insights

Leading investor with a track record for performance and adding value in

LFR

Specialised team focused on operational excellence

Single sector focus

Long history of LFR retailer relationships

Aventus Property Group

APPENDIX 1: PORTFOLIO OVERVIEW

Highlands Hub, NSW


Portfolio OverviewCentre State

Valuation Date

Carrying Value ($m)2

Cap Rate

Occupancy3 WALE (years)4

No. of Tenancies

GLA (sqm)

Site Area (sqm)

National Retailers

ZoningDev.

Potential5

Ballarat Home VIC Dec-16 37.3 7.75% 100% 6.0 15 20,099 52,084 93% LFR P

Bankstown Home NSW Jun-16 53.3 7.25% 100% 2.8 20 17,171 40,240 92% LFR P

Belrose Super Centre1 NSW Dec-16 132.9 7.06% 100% 4.5 43 34,339 44,265 90% LFR/Retail P

Caringbah Home NSW Dec-16 90.0 7.75% 100% 2.0 26 19,377 22,818 84% LFR P

Cranbourne Home VIC Dec-167 125.0 7.25% 100% 6.8 32 54,315 193,900 91% LFR/Retail P

Epping Hub VIC Dec-16 40.0 7.75% 96% 2.3 29 22,141 59,770 69% Mixed Use P

Highlands Hub NSW Dec-167 31.2 7.75% 99% 4.0 14 11,404 31,890 87% LFR/Retail P

Jindalee Home QLD Dec-16 106.6 7.50% 99% 4.1 58 26,714 72,030 68% LFR/Retail P

Kotara Home South NSW Dec-16 108.0 7.00% 98% 4.7 22 29,148 53,390 93% LFR/Retail P

Logan Super Centre QLD Jun-16 81.9 7.25% 98% 3.4 28 26,997 26,790 83% LFR P

Macgregor Home QLD Jun-16 26.1 7.75% 100% 0.8 6 12,505 29,128 69% LFR P

McGraths Hill Home NSW Jun-16 36.1 7.25% 100% 3.0 9 16,478 37,840 94% LFR O

Midland Home WA Dec-16 56.1 7.75% 100% 4.9 18 23,411 42,640 94% LFR O

Mile End Home SA Dec-167 89.5 7.50% 100% 4.4 32 33,447 71,320 87% LFR P

Peninsula Home VIC Dec-167 75.3 7.50% 100% 3.5 30 33,064 84,651 83% LFR/Retail P

Shepparton Home VIC Jun-16 21.6 8.00% 81% 4.4 11 13,661 30,290 81% LFR P

Sunshine Coast Home3 QLD Dec-16 69.1 7.50% 87% 4.7 34 27,584 68,877 83% LFR/Retail P

Tuggerah Super Centre6 NSW Dec-16 64.9 7.00% 100% 6.9 22 28,576 127,410 92% LFR/Outlet P

Tweed Hub NSW Dec-167 34.2 7.50% 97% 4.1 17 9,763 26,200 49% LFR/Retail O

Warners Bay Home NSW Dec-167 35.2 7.75% 100% 3.6 12 12,337 35,140 90% LFR O

Total Portfolio 1,314.3 7.40% 98.0% 4.3 478 472,531 1,150,673 84%

1. Metrics are calculated on a weighted average basis (by value) including Belrose Super Centre and adjacent Belrose Gateway Centre

2. Valuations are on ‘as if complete’ basis

3. By GLA as at 31 Dec 2016; reflects signed leases to Super Amart and Sheridan at Sunshine Coast Home due to be occupied within FY17

4. By gross income as at 31 Dec 2016 (excluding rental guarantees)

5. Further development of certain centres may be subject to contractual and regulatory approvals including planning approvals from relevant local government authorities

6. Carrying value for Tuggerah includes $3.8 million of vacant land purchased in Jul 2016

7. Independently valued

29

Diversified Portfolio1

4%89%

44%

23%7%

LOCATIONS:

NSW

Belrose Super Centre

Bankstown Home

Caringbah Home

Highlands Hub

Kotara Home South

McGraths Hill Home

Tuggerah Super Centre

Tweed Hub

Warners Bay Home

VIC

Ballarat Home

Cranbourne Home

Epping Hub

Peninsula Home

Shepparton Home

QLD

Jindalee Home

Logan Super Centre

Macgregor Home

Sunshine Coast Home

SA

Mile End Home

WA

Midland Home

20Our

centres

1. By value

WA

EAST COAST

SA

NSW

VIC

22% QLD

29

APPENDIX 2: INDUSTRY DYNAMICS

Mile End Home, SA


Improving quality of tenants

• Independent family

operated with high

concentration of furniture

and household goods,

and few international

retailers

• Predominantly national, ASX listed or international retailers

with multi-brand strategy

• Providing greater transparency of retailer performance

• Ensuring income streams are more reliable and consistent

Increasing centre size and improved design

• Smaller centres with

basic design (industrial

single level buildings)

• Larger more dominant centres creating critical mass as a

single destination offering

• Development of modern multi-level centres in mainly

metropolitan locations with ample car parking, ease of

access and modern amenities

Changing shopper habits

• Mainly weekend visits for

discretionary products

• All-week visits with increasing dwell time and preference

for comparison shopping

• Demand for family focused, higher quality and diverse

goods and services (eg food and beverage, small

supermarkets, medical, fitness and leisure)

Flexible planning controls

• Strictly bulky / household

goods and minimum

store size

• Expansion of new uses and removal of minimum store size

has allowed for the introduction of new offerings in centres

• Potential for other states to reform and improve planning

controls (eg WA and NSW)

The Changing Nature of LFR Centres

Old Bulky Goods Centres Modern AVN LFR Centres


Industry Dynamics• Large Format Retail goods are a substantial retail

segment in Australia

– Approximately $65bn in sales or 20% of total retail spend in Australia1

– Approximately 30% of total retail floor spacein Australia1

• Large format retail spend is beginning to normalise relative to consistent outperformance of total retail in the last few years

– BIS Shrapnel predicts spending on household goods to grow at approximately 4% per annum for 2017 and 2018

– Retailer demand has remained strong, not only in traditional household sectors, but also in the range of other non-household uses that are becoming more prevalent in LFR centres, such as cafes, fitness centres, pet and auto accessories, children’s play centres, chemists and supermarkets

1. Source: Large Format Retail Association

2. Source: ABS retail trade

RETAIL TURNOVER GROWTH 12 MONTHS TO 31 DEC 20162

2.7%

4.4%

1.0%

2.5%

1.3%

6.4%

6.7%

3.7%

0.6%

(4.1%)

3.0%

4.5%

8.0%

1.7%

8.0%

Supermarkets

Liquor

Other specialised food

Furniture

Electrical

Hardware & garden

Clothing

Footware & personal accessories

Department stores

Newspaper & books

Other recreational goods

Pharmaceuticals, cosmetics & toiletries

Other retailing

Cafes & restaurants

Takeaway


0

50

100

150

(10%)

(5%)

0%

5%

10%

15%

20%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Quarterly change (YoY) Residential Property Price Index

Demand for Household GoodsDemand for household goods influenced by many factors

• Strong growth in house prices since 2013 (now moderating)

• High levels of dwelling approvals (lag effect of up to three years) and dwelling completions

• Turnover of existing dwellings (now moderating)

• Home improvements are a natural hedge with renovations continuing through the cycle (but with smaller scope)

Other factors affecting demand for LFR goods include

• Interest rate environment and employment levels impact consumer sentiment

• Household incomes and savings ratio

• Changes in life stages and population growth (births, ageing, divorce, upgraders, downsizers and migration)

• Product trends, replacements and popularity of home renovations generate interest and attention for large format retailers (eg The Block)

• Limited impact to date of online retailing as LFR goods are considered major bulky purchases and have a ‘touch and feel’ element

1. Source: ABS residential property price index

2. Source: ABS dwelling approvals and completions

RESIDENTIAL PRICESYEAR ENDED SEP 20161

ANNUAL NATIONAL DWELLING COMPLETIONS AND APPROVALS2

100,000

150,000

200,000

250,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Dwelling completions - year ending September

Dwelling approvals - year ending September

72% increase over 10 years

7-year avg approvals: 159k

3-year avg approvals: 225k


0

100

200

300

400

500

600

700

800

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016e

Centres Freestanding superstores

e = estimate

The LFR Supply Pipeline• Construction of freestanding floorspace is at its lowest level since 2009, while construction of multi-tenanted centre

floorspace1 is at the lowest level on record. There were no projects of over 20,000 sqm and only two above 10,000 sqmcompleted in 2016

• Excluding former Masters tenancies, 2017 is likely to be another modest year for completions following subdued supply in 2016

• While the former Masters tenancies may come into supply in the future, the tenancies are distinguishable from AVN centres in that they:

– have been single tenanted and the shape/depth of the former Masters tenancies could limit the introduction of smaller tenancies e.g. food and beverage

– are approximately 11,000 sqm or less than half the size of an average AVN centre

– Their smaller scale could limit the appeal to shoppers seeking a range of large format retailers and the ability to cross andcomparison shop

LARGE FORMAT RETAIL FLOORSPACE COMPLETIONS BY TYPE AND TOTAL STOCK1

1. Source: BIS Shrapnel, Dec 2016; year ended Dec; multi-tenanted centres larger than 4,000 sqm

'000 sqm


Important Notice

This presentation has been prepared on behalf of the Aventus Retail Property Fund (ARSN 608 000 764) (AVN). Aventus Capital Limited (ABN 34 606 555 480 AFSL 478061) (ACL) is the Responsible Entity of AVN. The information contained in this document is current only as at 31 December 2016 or as otherwise stated herein. This document is for information purposes only and only intended for the audience to whom it is presented. This document contains selected information and should be read in conjunction with the financial statements for the period and other ASX announcements released from time to time. This document may not be reproduced or distributed without AVN’s prior written consent. The information contained in this document is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. AVN has not considered the investment objectives, financial circumstances or particular needs of any particular recipient. You should consider your own financial situation, objectives and needs, conduct an independent investigation of, and if necessary obtain professional advice in relation to, this document.

Except as required by law, no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions, or as to the reasonableness of any assumption, contained in this document. By receiving this document and to the extent permitted by law, you release AVN and ACL and its directors, officers, employees, agents, advisers and associates from any liability (including, without limitation, in respect of direct, indirect or consequential loss or damage or any loss or damage arising from negligence) arising as a result of the reliance by you or any other person on anything contained in or omitted from this document.

This document contains certain forward-looking statements along with certain forecast financial information. The words “anticipate”, “believe”, “expect”, “project”, “forecast”, “guidance”, “estimate”, “outlook”, “upside”, “likely”, “intend”, “should”, “could”, “may”, “target”, “plan”, and other similar expressions are intended to identify forward-looking statements. The forward-looking statements are made only as at the date of this document and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of AVN. Such statements reflect the current expectations of AVN concerning future results and events, and are not guarantees of future performance. Actual results or outcomes for AVN may differ materially from the anticipated results, performance or achievements expressed, projected or implied by these forward-looking statements or forecasts. Other than as required by law, although they believe that there is a reasonable basis for the forward-looking statements, neither AVN nor any other person gives any representation, assurance or guarantee (express or implied) that the occurrence of these events, or the results, performance or achievements expressed in or implied by any forward-looking statements contained herein will actually occur and you are cautioned not to place undue reliance on such forward-looking statements. Risk factors (which could be unknown or unpredictable or result from a variation in the assumptions underlying the forecasts) could cause actual results to differ materially from those expressed, implied or projected in any forward-looking statements or forecast. Past performance is not an indicator or guarantee of future performance or results.

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